LetsTalkCondo_Spring ... - Miller Thomson

Spring 2013

Let’s Talk Condo Pages 331 - 334

Ontario’s Condominium Law Experts

in this issue Waiver of Subrogation Clauses in Unit Owner Insurance Policies

............................331 Enforcement: Turning a Blind Eye Is Not an Option

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Waiver of Subrogation Clauses in Unit Owner Insurance Policies For example, a person in an automobile accident that is caused by another person submits a claim to his or her insurer. The insurance company pays out the insured’s by Patrick Greco claim and then assumes the insured’s 416.595.2982 legal rights. The insurance company then [email protected] seeks reimbursement from the person The declarations of many condominium that caused the accident, usually via a corporations contain a provision requiring lawsuit. insurance policies to include a “waiver When an insurance policy contains a of subrogation” against a number of waiver of subrogation, the insurance parties, including the corporation, company knowingly relinquishes any rights manager, agents, employees, owners, that it may have to seek reimbursement residents, tenants, invitees, etc. What from a third party, even if that party is are the benefits of such a provision, and responsible for the damage or loss. would unit owners benefit from removing the waiver of subrogation, especially Subrogation in condominium policies where there are incidents of repeat Most declarations that include a waiver damage caused by the same unit? of subrogation make this a mutual requirement, so that, the corporation’s What is subrogation? insurer cannot pursue unit owners that Subrogation is a legal concept that permits cause damage, and a unit owner’s insurer an insurance company to stand in the cannot pursue the corporation or other place of its insured and seek recovery for unit owners who may have been losses paid under the insurance policy responsible for the damage. from a third party that caused the damage. Continued on page 332 Our Mission

Our mission is to provide comprehensive, competitively priced, value-added, community oriented solutions throughout Ontario utilizing the range of knowledge and depth of expertise of a larger firm, while providing professional, friendly and timely service to our clients. With offices in Toronto, Markham, Guelph, London and Kitchener-Waterloo, our Condominium Practice Group is part of a full service law firm which provides us with significant strengths in matching your legal needs to our resources. Our office systems and technology assist us in providing quick turnaround on a cost efficient basis.

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It is important to note that, where a declaration includes a waiver of subrogation clause, the actual wording of the insurance policy is somewhat irrelevant. On a number of occasions, courts have found that where a declaration requires a waiver of subrogation, a policy that does not contain the provision will be deemed to contain one. The underlying basis is that the insurer would have had access to the declaration at the time the policy was entered into, and therefore ought to have been aware of the waiver.

Would removal of the waiver of subrogation be beneficial?

In our view, removing the waiver of subrogation from a condominium corporation’s declaration would not be in the best interests of a corporation or its individual unit owners and residents. Deleting the waiver of subrogation against other owners and residents would negatively impact an owner’s ability to obtain insurance for improvements, fixtures, possessions, etc. Without a waiver of subrogation provision, a unit owner’s insurer would be liable not only for the costs of repairing the damage to the improvements Purpose of the Waiver of subrogation and content in the insured unit itself, but also for the cost Why would an insurance company agree to waive its right of repairing improvements and contents of all other units to seek reimbursement from a third party responsible for and/or common elements that are damaged. damage? The answer is that insurance companies have a fear of the unknown. A waiver of subrogation crystallizes Not all condominium declarations contain a waiver of the amount that an insurance company may be asked to subrogation provision, and where they do, the parties pay. In the condominium context, the maximum that the covered by the waiver are not always the same. For example, corporation’s insurer may be asked to compensate under tenants may not be protected under the waiver of a claim will be based on the common elements and the subrogation clause. The insurance provisions of a standard unit for each class of units within the corporation. condominium corporation’s declaration should always be For the unit owner’s insurance provider, the maximum reviewed carefully. A corporation’s insurer and/or legal amount that it may be asked to compensate is dependant counsel should be contacted for guidance where necessary. ••• on the improvements, alterations, fixtures, etc., to the unit it insures. With a waiver in place, it becomes unnecessary to factor in the unknown contents and improvements found in other units.

NEWSLETTER

TIP

The installation and use of video surveillance cameras to address breaches of a condominium corporation’s governing documents, and/or trespassing, is within the power and authority of the condominium corporation. However, individuals have a right to be advised that they are being monitored. Signs which clearly indicate the presence of video surveillance cameras and their purpose should be posted in the condominium complex. We also suggest that the video surveillance footage should only be regularly monitored by designated representatives i.e. security personnel and property management. Directors should only view video footage if it relates to a specific health, safety, security, rules violation and/or trespassing incident or issue. The corporation and/or its agents will not be shielded from liability if the cameras are used for self-dealing or discriminatory purposes. If the video surveillance is for the purpose of monitoring the corporation’s employees, legal counsel should be contacted prior to such surveillance as there are additional factors that need to be taken into account. - 332 40 King Street West Suite 5800, P.O. Box 1011, Toronto, ON, Canada M5H 3S1 Tel. 416.595.8500 • Toll Free 1.888.762.5559 ext.2968 • Fax 416.595.8695 • www.millerthomson.com

NEWSLETTER

TIP

Ontario has legislation specifically dealing with the use of automated external defibrillators (AED). The Heart Defibrillator Civil Liability Act, 2006 protects individuals from liability for damages that may occur from their use of an AED to save someone’s life at the immediate scene of an emergency, unless damages are caused by gross negligence. Condominium corporations on which AEDs are installed are also protected from liability provided that the AEDs are made available in good faith and are properly maintained. If a condominium corporation decides to install an AED, in addition to ensuring that AEDs are properly maintained, it is always a good idea for security staff to be trained in the use of AEDs.

Enforcement: Turning a Blind Eye Is Not an Option condominium corporation from allegations of selective enforcement. If violations are brought to the board’s attention and are left unpunished, future attempts to enforce those by provisions may give rise to allegations of selective Odysseas Papadimitriou enforcement. Generally, the decision-maker will not 416.595.8559 substitute its own opinion for that of the board of directors, [email protected] unless the decision maker is of the view that the board A condominium corporation that turns a blind eye to blatant has acted capriciously or unreasonably. Nevertheless, in violations of its governing documents for extended periods so far as reasonably possible, the Governing Documents may be in breach of the Condominium Act, 1998 (the should be enforced uniformly. “Act”). The Act requires that everyone in the condominium community comply with the Act, the declaration, by-laws At the same time, the condominium corporation is not required to adopt a “compliance at any cost” approach and rules (the “Governing Documents”). when responding to complaints made by other unit owners. The condominium corporation has a statutory duty to take Enforcement is very fact driven. A brief note from all “reasonable steps” to ensure compliance. Owners and management or the board may be “reasonable” where the occupiers are entitled to expect that others will observe the violation is minor or an isolated incident. However, a stronger Governing Documents and that if they fail to do so, the response from the condominium corporation’s solicitor corporation will take “reasonable steps” to enforce the may be required where the violation has a greater or Governing Documents. immediate impact on the condominium community. The If provisions of the Governing Documents are left unenforced importance of the provision being violated, the duration of for too long, the condominium corporation is left vulnerable the problem, the potential financial impact of the breach to a defence that it has “slept on its rights” or waived its or the impact on the lives of others, should all be taken into right to enforce those provisions, and subsequent attempts account to determine the “reasonable steps”. to enforce those provisions may be challenged as being In most instances, the first step is for the board or manager discriminatory or contrary to past practice. Although it is to send the non-compliant unit owner a brief letter, advising not entirely certain whether such a defence will prevent a of the complaint and requesting voluntary compliance. If condominium corporation from enforcing its Governing this does not result in compliance, then the board or Documents, it is certainly a factor that may influence the manager should provide the non-compliant unit owner decision-maker’s discretion in an enforcement case. with a second letter requesting voluntary compliance. The Reasonable and timely enforcement also protects the second letter should advise the non-compliant owner of the Continued on page 334

- 333 40 King Street West Suite 5800, P.O. Box 1011, Toronto, ON, Canada M5H 3S1 Tel. 416.595.8500 • Toll Free 1.888.762.5559 ext.2968 • Fax 416.595.8695 • www.millerthomson.com

Continued from page 333

nature of the complaints, the provisions of the Governing Documents that are being breached, the duty of the condominium corporation to seek compliance, the required corrective action for compliance, and give a reasonable deadline by which corrective action must be taken, failing which further enforcement steps will follow.

If voluntary compliance is not secured, then legal counsel should be consulted to discuss the various options for proceeding, along with the cost and likelihood of succeeding in the case. •••

Change — It is one of those things you just grow to accept.

We are excited to announce that Marko Djurdjevac has been asked to join the Ministry of Consumer Services to work on the amendments to the Condominium Act. The opportunity to be involved in creating the future condominium law for Ontario was just too good for him to pass up. Marko has been a real asset to our group and we will miss him, but we like to think his association with Miller Thomson LLP has made him the most qualified person for this newly created position with the government of Ontario. We congratulate him and wish him all the best with this new challenge. The good news is that the Province is serious about amending the Condominium Act. The bad news is we are losing Marko. Since the Miller Thomson condominium group members are also actively involved in the amendments to the Condominium Act we expect that we will remain in close contact with Marko. We have gone through many changes over the years. We are proud to say that we have weathered all of them, with extra effort at transition but with no gaps in our service to our clients. We expect this to be the same.

OUR CONDOMINIUM PRACTICE GROUP Audrey M. Loeb General [email protected] 416.595.8196 Jeffrey W. Lem General [email protected] 905.415.6715 Patrick Greco General [email protected] 416.595.2982 Odysseas Papadimitriou General [email protected] 416.595.8559

Michael L. Shell Litigation [email protected] 905.415.6709 Megan Mackey Litigation [email protected] 416.595.8623 Brittany Benning Litigation [email protected] 416.595.8631 Barbara Zeller General [email protected] 416.595.8622

Dražen Bulat Construction [email protected] 416.595.8613 André Nowakowski Employment [email protected] 416.595.2986 Tamara Farber Environmental [email protected] 416.595.8520 Lizann McInnes Liens [email protected] 416.597.4370

Ontario’s Condominium Law Experts This newsletter is provided as an information service to our clients and is a summary of current legal issues. These articles are not meant as legal opinions and readers are cautioned not to act on information provided in this newsletter without seeking specific legal advice with respect to their unique circumstances. Miller Thomson LLP uses your contact information to send you information on legal topics that may be of interest to you. It does not share your personal information outside the firm, except with sub-contractors who have agreed to abide by its privacy policy and other rules. If you would like to receive our newsletter, please email [email protected] Miller Thomson LLP, 2011 All Rights Reserved. All Intellectual Property Rights including copyright in this publication are owned by Miller Thomson LLP. This publication may be reproduced and distributed in its entirety provided no alterations are made to the form or content. Any other form of reproduction or distribution requires the prior written consent of Miller Thomson LLP which may be requested from Betty Dworatschek Tel: 416.595.2968 Email: [email protected]

- 334 40 King Street West Suite 5800, P.O. Box 1011, Toronto, ON, Canada M5H 3S1 Tel. 416.595.8500 • Toll Free 1.888.762.5559 ext.2968 • Fax 416.595.8695 • www.millerthomson.com